With Chávez's Death Comes Grief for His Socialist Allies

The flag-draped coffin of Hugo Chávez was taken to a military academy to remain until his funeral in Caracas Friday.
Ricardo Mazalan/Associated Press

By

Sara Schaefer Muñoz in Caracas and

Keith Johnson in Washington

Updated March 7, 2013 6:01 p.m. ET

Mourners pressed tight around the flag-draped coffin of Venezuelan President Hugo Chávez in Caracas on Wednesday, but his death reached beyond the nation's borders, auguring the passing of the fiery brand of socialism he bankrolled and nurtured across Latin America.

WSJ's Liam Denning explains why Venezuela's once-massive oil industry will be slow to get back on its feet, as well as the wide-reaching impact the country's oil holdings have on the U.S. market. Photo: Getty Images.

Cuba, Venezuela's closest ally, is struggling economically. Argentina is beset by inflation. Ecuador and Bolivia are more absorbed by internal politics than ideological struggles. And nations with close U.S. ties, like Mexico, are making economic gains by comparison.

Mr. Chávez's death and the troubles for his allies are likely to cement the recent rise of a pragmatic brand of leftist politics practiced by ruling parties in Brazil, Peru and Uruguay, whom he sometimes overshadowed. It also presents an opening for the U.S. to rebuild relationships across South America.

During his 14 years in power, the populist former tank commander emerged as the figurehead of anti-American, left-wing politics in the region.

With Fidel Castro's sway having waned since the Cold War's end, Mr. Chávez took the mantle of "revolutionary" fighting U.S. "imperialism." He once famously called former President George W. Bush "the devil" and cultivated allies from China to Iran.

From Coup Leader to President

Mourning Chávez

A supporter of Venezuelan President Hugo Chávez cried outside the Military Hospital in Caracas, Venezuela, Tuesday after learning of his death. Leo Ramirez/AFP/Getty Images

In Caracas on Thursday, thousands of Venezuelans waited many hours for access to the chapel where late President Hugo Chavez's remains lie in state. Lines ran for miles. WSJ's Kejal Vyas reports via #WorldStream.

For years, Mr. Chávez gained admirers and influence in the region by giving billions of dollars worth of oil to Cuba, Nicaragua and others. He helped like-minded populists in Argentina, Bolivia and Ecuador, and pushed a trade bloc and a multilateral body that excluded the U.S.

Other leaders from around the region flocked to Caracas on Wednesday, including presidents Evo Morales of Bolivia, Cristina Kirchner of Argentina and José "Pepe" Mujica of Uruguay, honoring the late president at a mall dedicated to Venezuela's independence.

"The flags of liberty that Chávez raised will keep waving…he lives in our promise to continue the revolution," said President Daniel Ortega of Nicaragua.

Mr. Chávez's coffin was paraded through the streets of the capital, a day after Vice President Nicolás Maduro broke the news to his countrymen that he had died. Venezuelan authorities promised to maintain order and asked for calm.

Mr. Maduro, who on Wednesday signed a decree making him acting president, must call an election within a month, and political experts expect him to beat Henrique Capriles, who lost to Mr. Chávez in October and on Wednesday emerged as a candidate again.

Most analysts say Mr. Maduro, a one-time bus driver, lacks the flair needed to stir legions of followers and carry on Mr. Chávez's influence in the region. And with Venezuela facing deepening economic woes, Mr. Maduro would also lack the flexibility to employ oil diplomacy in the region.

Most Venezuelans say they would prefer their oil money spent at home rather than abroad. If Mr. Capriles were to win upcoming elections, he said he would end most aid to Cuba.

Even before he died on Tuesday after a 20-month battle with cancer, Mr. Chávez's model had lost much of its appeal, mostly because it failed at home.

Mr. Chávez's free-spending ways reduced poverty, but he also concentrated power, divided his population, and left an economy hobbled by corruption, inefficiency and almost entirely dependent on high oil prices, many observers say.

"You've already seen a turn away from Chávez's '21st century socialism,'" said Shannon O'Neil, a scholar at the Council on Foreign Relations, a nonpartisan think tank. "Now, that view has lost its loudest voice."

WSJ's Mary Anastasia O'Grady on the death of Venezuelan president Hugo Chavez and what it means for succession and for the U.S. (Photo: Getty Images)

In other countries of Latin America, there are already signs that Mr. Chávez's style is being edged out by a more moderate and market-friendly version, said Daniel Hoyos, director of the department of economics at the Universidad Nacional del Centro in Buenos Aires.

Many such leaders of the left "have not given up their ideas, but they've bathed them in a big dose of realism," said Mr. Hoyos.

He cited recent left-leaning leaders in Chile, as well as Brazilian President Dilma Rousseff and Mr. Mujica, both of whom were imprisoned as leftist guerrillas in their youth but have reinvented themselves through politics as pragmatists.

The region has also seen the rise of a group of countries that includes Mexico, Peru, Chile and Colombia that all have free-trade deals with the U.S. and Europe. They have economies that are lately growing faster and are more stable than Venezuela and Argentina, where inflation is high and growth has slowed.

"I think Chávez's legacy is precisely that his project failed, forcing us to think about offering a leftist alternative that challenges the elites, but is democratic (without any ifs, ands, or buts), institutional (no strongmen), and has a sustainable project for economic growth and reduction of inequality in our countries," Vidal Llerenas, a lawmaker from Mexico's leftist Party of the Democratic Revolution, wrote in a blog post.

WSJ's Mexico City Bureau Chief David Luhnow provides an overview of the late Venezuelan president's rule. For an in-depth look, watch:"Strongman - Hugo Chavez and His Legacy, A WSJ Documentary."

For the U.S., the removal of a longtime critic could ease some of the polarization that has characterized the region over the past decade and open a path to more normal relations with Venezuela.

"The opportunity is that the revolutionary who had the deepest pockets is gone," said Otto Reich, a former ambassador to Venezuela under George W. Bush and a vocal critic of Venezuela's regime. "The risk is that his revolution may survive him."

Since taking office in 2009, the Obama administration sought to ignore provocations from Mr. Chávez, including the expulsion of U.S. diplomats and a barrage of anti-American rhetoric. In November, Washington's top diplomat for the region, Roberta Jacobson, called Mr. Maduro to discuss how to improve ties.

Hopes for cozier dealings in the short-run, however, seem unlikely.

Mr. Maduro on Tuesday expelled two U.S. military attaches in Caracas for allegedly trying to foment conspiracy within the Venezuelan armed forces, and even suggested that the U.S. and other "enemies" somehow poisoned Mr. Chávez and gave him cancer. U.S. officials are reviewing whether to reciprocate with the expulsion of Venezuelan diplomats.

"This is really sad. We are going to return to being the boogeyman," said a senior U.S. official. "Everybody needs to be prepared for a bumpy ride."

Some experts say anti-U.S. rhetoric is bound to continue for the near term as Mr. Maduro seeks to project a tough stance and solidify his power ahead of next month's polls.

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"Maduro will want to continue this idea as U.S. as external threat and get the Venezuelans to rally around him," said Eric Farnsworth, vice president of the Council of the Americas, an organization that promotes free trade in the region.

He said the country may see a new wave of nationalizations and public spending as Mr. Maduro seeks to make his mark as Chávez's heir.

The populist Mr. Correa also offered asylum last year to WikiLeaks founder Julian Assange—a taunt to the U.S., where government officials were irate with Mr. Assange's unauthorized publication of sensitive documents.

But analysts say he is focused on solidifying his power in Ecuador—and unlikely to push his populist vision across the continent. While Mr. Correa is a strong critic of neo-liberal trade polices, the U.S.-educated economist also sees a role for the private sector in the economy and hasn't done widespread nationalizations like Mr. Chávez did.

ENLARGE

Supporters of Hugo Chávez mourn as his coffin passes in Caracas.
Associated Press

Mrs. Kirchner of Argentina gained notoriety on the global stage for anti-free market moves, seizing oil producer YPF from Spanish company Repsol SA, and expanding the country's capital controls and import restrictions. But analysts say she, too, is currently tied up with domestic issues, such as inflation running at an estimated 25% and a battle with media group Clarin.

"All the other [leftist] leaders are faced with their own domestic problems right now, and they don't have the wealth that allowed Chávez to spend like a drunken sailor," Mr. Farnsworth said."The big thing U.S. could do is change its Cuba policy," said Michael Shifter, president of the Inter-American Dialogue, a Washington, D.C. think tank. "It would help a lot to boost the image of the U.S.…it's such a huge symbolic significance."

The U.S. could take steps to win over much of Latin America. Among them: lift the half-century old embargo on Cuba, where an aging communist regime has started to open up its borders, recently allowing Cubans access to passports and travel for the first time in decades.

While change in Cuba policy may be unlikely, current talks to reform U.S. immigration laws would also help the U.S. image in the region, he added.

The Cuban government said Wednesday it considered the late Mr. Chávez a "true son" and said he fulfilled the dream of Latin American liberator Simon Bolivar by creating the eight-member Bolivarian Alliance for the Americas trade bloc and the 33-member Community of Latin American and Caribbean States, currently chaired by Raúl Castro.

The U.S. and Latin America have deepening economic ties that should promote mutual interests. Goods and services trade between the U.S. and the Western Hemisphere (including Canada) totaled $1.7 trillion in 2011, according to the office of the U.S. trade representative.

In the past three years, Latin America has been an important market for U.S. goods, and exports to Latin America increased by $250 billion to nearly $700 billion in 2011, according to testimony last month in Congress by Ms. Jacobson, the Assistant Secretary of State for the Bureau of Western Hemisphere Affairs.

Even trade with Venezuela, thanks largely to oil, has been vibrant during the Chávez years. Two-way trade between the U.S. and Venezuela totaled $62 billion in 2011, and Venezuela is the 14th-largest U.S. trade partner, according to the U.S. trade representative. The U.S. imports about one million barrels of oil a day from Venezuela and is the biggest customer for Venezuelan oil.

One U.S. official said that Mr. Chávez had a lasting impact on U.S. diplomacy. The rise of a charismatic leader who used an election to come to power, but then proceeded to dismantle his country's democratic institutions prompted U.S. diplomats to broaden efforts to push democracy.

"We have become much more attuned to the fact that unless democracy produces results for the poorest of the poor, it is vulnerable," he said.

—John Lyons in São Paulo and David Luhnow in Mexico City contributed to this article.

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